CANBERRA OBSERVED: Has Kevin Rudd made his biggest mistake?

The federal Labor Opposition leader could yet snatch defeat from the jaws of victory.

Kevin Rudd may have made a major miscalculation on his workplace relations policy, giving John Howard the beachhead on which to claw back ground before the election.

The initial reaction to the Rudd IR policy was quite savage, with business groups and commentators condemning Mr Rudd for taking Australia back to a centralised system which gives implicit powers to the unions.

The policy includes a package of measures which restores penalty rates, abolishes Australian workplace agreements (AWAs), and requires employees and employers to bargain collectively in workplaces where the majority want them to.

Adversarial era

Some have argued that the system takes Australia back to a pre-Keating adversarial era in which the Industrial Relations Commission had supreme powers, rather than the current one which has evolved into a decentralised workplace-based system.

Business objects to the doubling in the number of minimum standards from five to 10, including doubling the existing 12 months' unpaid parental leave.

One peak body, the Australian Industry Group, argues in particular that the Labor proposals would see the re-emergence of pattern bargaining campaigns in manufacturing and construction.

(Pattern bargaining is when a pay rise negotiated for a particular industry is imposed indiscriminately on firms throughout that industry, regardless of their differing financial circumstances.)

The answer as to whether the IR policy has harmed Mr Rudd's prospects will not be clear for several weeks while the public digest the Rudd/Julia Gillard proposals and the reaction to it from business and the Coalition.

However, it appears Mr Rudd has chosen to go a long way to placate or appease the unions by acceding to their extended wish-list.

Ironically, it was John Howard who was on the ropes courtesy of his unpopular WorkChoices laws which had pulled away many of the safeguards for vulnerable workers.

As a result, hundreds of thousands of workers were vulnerable to being forced to work on public holidays on ordinary pay, to losing overtime and to losing penalty rates for working on the weekends or night shift.

Mr Howard's laws also made it extremely difficult for unions to enter non-union worksites to check conditions and recruit members.

There was a growing disquiet that Mr Howard had gone too far by introducing a system that required individuals to single-handedly have to negotiate with large corporations.

But it appears that Mr Rudd, in an effort to re-balance the equation, has opted to swing the pendulum back in favour of union power.

Mr Rudd's safety net would (a) restore penalty rates for working on public holidays, (b) double unpaid parental leave to two years, (c) ensure that information about unions is in each workplace, and (d) provide for notice of termination and long-service leave.

Labor's plan also creates a new legal right to request family-friendly hours.

Of course, Mr Rudd has also decided to abolish Australian workplace agreements which were introduced by the Howard Government in 1997, along with the subsequent abolition of the “no disadvantage test”.

AWAs are popular in the mining industry and other sectors of the economy, but unions don't like them because they cut out award conditions and negate the concept of collective bargaining.

It has also emerged that Labor's hand-picked link to business, former British Airways boss Sir Rod Eddington, was not consulted before the policy was announced.

Brutal campaign

The stand-off between the two parties sets the scene for a brutal election campaign which will have an historic result.

It will be a momentous election.

If Mr Howard has misjudged the capacity for Australia to accept a radical market-based workplace system, his final political act will have been to botch a lifetime political ambition to destroy the power of the union movement.

On the other hand, if Mr Rudd were to lose, Labor would have to entirely reassess its relationship with the unions, altering the way politics in Australia is conducted.